Whitehall unit will examine contracts after Capita pensions fiasco strengthens case for bringing work in-house
The UK government is setting up a new unit it promises will "bring forward the biggest wave of insourcing in a generation."
Government outsourcing has long attracted criticism over value for money and service quality, with technology-heavy business processes among the contracts coming under scrutiny.
The government said the new unit, based within the Office for the Prime Minister and Cabinet, would "coordinate departmental insourcing activity, unblock barriers to delivery and identify cross-government opportunities to maximize value for money and restore direct operational accountability."
The unit will consider bringing service contracts back in-house and work alongside the recently announced Public Interest Test, which applies to most central government service contracts worth at least £1 million. The test requires departments to consider factors beyond short-term price, including service quality and public value. The unit is also expected to help reduce spending on consultants and professional services by building capability within the Civil Service.
One early candidate is the Cabinet Office's building management work, including cleaning and security, which the government says it will consider bringing in-house when existing contracts end in 2028.
The case for insourcing has gained urgency in Whitehall following the start to Capita's contract to administer the Civil Service Pension Scheme (CSPS).
The UK outsourcing company won the seven-year, £239 million contract in November 2023 and took over from MyCSP in December 2025. The previous arrangement with MyCSP began in 2012 and had cost £238 million since 2016. Capita's takeover produced a glitchy website and left some former civil servants struggling to access their pensions, as The Reg exclusively said..
In July, Nick Thomas-Symonds, Minister for the Cabinet Office, said the Capita CSPS contract "could be a prime candidate for insourcing in the future."
However, he also said that option would have to wait. "If I were to terminate the contract straightaway, that would clearly cause severe disruption to the payroll. I cannot replace a complex pension operation overnight," Thomas-Symonds said.
Even if the government eventually brings the pension administration back in-house, it is unlikely to be an early candidate. Capita's initial seven-year term runs until December 2032, and the contract includes an option for a further three years. ®